CRE Show: U.S. Industrial Market Set to Take Off

Top Quote Guests of the "Commercial Real Estate Show" discuss an industrial market they say is poised to perform very well in upcoming years. End Quote
  • Atlanta, GA (1888PressRelease) February 01, 2012 - It may be the least glamorous of the commercial real estate sectors, but the U.S. industrial market is beginning to shine and will prove a popular destination for investors' dollars.

    Guests on the most recent episode of the "Commercial Real Estate Show" shared those observations and others in a thorough update on the market. Topics included sector fundamentals, investment sales activity, tenant attitudes and spec development.

    Nationally, the industrial real estate market has experienced seven consecutive quarters of positive net absorption, noted Mike Felton, vice president, corporate industrial services, for Bull Realty. In 2011, the national vacancy rate declined from 10 percent to 9.5 percent.

    Mitch Roschelle, a partner with PricewaterhouseCoopers, said 2012 will be "a transition point" from the recent recession to a period of rent growth and new development. 2013 and 2014 will feature "a mini-explosion in the expansion of the sector," he said.

    Investment sales in the sector also will pick up steam in the year ahead, Roschelle predicted. "It's a neat little niche in the commercial real estate sector that often gets overlooked because it's not as sexy as some of the other property types but it's got a great yield, and I think that's going to be the catalyst for a big pickup in transaction volume, starting in 2012 and continuing thereafter," he added.

    "I agree: I think it's going to be a favored asset class moving forward," replied show host Michael Bull, the founder of Bull Realty.

    Tenants are finally exhibiting at least some increased confidence, said Ralph Kittrell, a principal with Exceter Property Group. "Being somewhat optimistic but being careful is the best way to put it," he said.

    "I would echo that For every deal that's got a right of first offer on a space that's adjacent to them, it's also got a termination option on what they've actually got under lease, so they're looking to get it on both sides," said Doug Smith, senior vice president for Seefried Properties.

    Kittrell also said his company is starting to see some demand for smaller deals. "I think that's good because the smaller companies are starting to see some growth and coming back into the market," he said.

    Approximately 40 percent of the 32 million square feet of industrial space under construction is spec development, Smith noted. In the near future, such development "is going to be spotty, and it's going to be in specific markets where there's some real drivers to convince folks to go spec, whether it's in Florida or [Southern California's] Inland Empire, Houston, and around some of the airports."

    To learn more about the U.S. industrial market, listen to the entire show, which is available for download at www.CREshow.com.

    The next "Commercial Real Estate Show" will be available Feb. 1 and will provide an update on the U.S. multifamily market.

    About the "Commercial Real Estate Show":

    America's "Commercial Real Estate Show" is a national talk radio show about commercial real estate. New shows are available beginning every Thursday at the show website, www.CREshow.com. Shows are also broadcast on AM stations, including Atlanta station Biz 1190 WAFS on Saturdays at 10 a.m. Show podcasts are available on-demand on iTunes and the show website.

    The show host is 30-year commercial real estate veteran Michael Bull, CCIM. Michael is the founder of Bull Realty, Inc, a regional commercial brokerage firm with three offices headquartered in Atlanta, Georgia.

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